How do investors decide? An interdisciplinary review of decision-making in crowdfunding

Crowdfunding is on the rise: its volume grew 1000% in only three years and is about to outpace worldwide venture capital spending. A quickly growing body of research is exploring the emerging crowdfunding phenomenon. While the literature offers a detailed and comprehensive picture of decision-making for traditional startup financing or bank loans, it does not provide a holistic understanding of decisions to invest in crowdfunded ventures. Many individual studies investigate isolated factors that influence investor decision-making in crowdfunding campaigns without integrating the findings regarding those influences. A comprehensive view of the relevant decision-making factors is necessary to build future research on and for practitioners to gain a better understanding of how investors choose. We conduct an interdisciplinary literature review to examine which factors influence the investment decisions in crowdfunding. From an analysis of 68 articles, we construct a comprehensive framework of relevant influence factors. Even though prior research covers many factors, others have received scant attention. Especially investors’ cognitive features and the context in which the investment decision is made seem to strongly influence decisions but are scarcely researched. In addition, most reviewed studies focus more on individual factors and campaign success than underlying decision processes. To highlight novel factors of crowdfunding investment decisions, we compare decision-making in traditional investments, such as venture capital and bank loans, to crowdfunding. Our findings offer new avenues for research toward understanding how the shift induced by crowdfunding changes our choices and actions. The analysis should support the endeavor to build better theories and provide a basis for further social and technological development.     

Product sampling on reward-based crowdfunding platforms

On reward-based crowdfunding platforms, uncertainty in investment outcome severely hinders transactions between online backers and fundraisers. The industry is dedicated to alleviating these dilemmas through campaign design and platform function design. In recent years, online product sampling has been introduced as a promising promotion instrument for fundraisers. Using a unique dataset of 4,027 campaign-level observations collected from China's highly influential JD Crowdfunding website z.jd.com, this study discusses whether and to what extent a product sampling strategy is beneficial to crowdfunding campaigns. Differences in the strategy's effectiveness across product types are also examined. Empirical results suggest that adopting online product sampling is helpful to crowdfunding performance because it increases the total number of backers, the total fundraising amounts, the average amount of funds raised per backer, the fundraising percentage, and the possibility of campaign success. The strength of product sampling, however, decreases along the search-experience product continuum.     

Exploring the impact of initial herd on overfunding in equity crowdfunding

Outcome of equity crowdfunding campaigns often exceeds original fundraising goals, leading to market inefficiency. This undesirable phenomenon of overfunding garnered little attention in past studies. Synthesizing extant literature on crowdfunding and herding, we identified the initial herd made visible by funding progress indicator as the main cause of overfunding. The impact of the initial herd can be quantified by three dimensions: maturity, intensity, and persistency. We then advance and validate a research model for examining how dimensions of the initial herd affect overfunding in equity crowdfunding. Findings from this study can shed light on plausible remedies for the overfunding issue.     

Dynamics of investor communication in equity crowdfunding

In crowdfunding, start-ups can voluntarily communicate with their investors by posting updates. We investigate whether start-ups strategically use updates, which have previously been shown to increase investments. To this end, we use hand-collected data from 751 updates and 39,036 investment decisions from two major German equity crowdfunding portals: Seedmatch and Companisto. We find evidence of strategic communication behavior of start-ups during an equity crowdfunding campaign. During the funding period, start-ups more frequently post updates with linguistic devices that enhance the group identity and the group cohesion as well as updates on the business development. Furthermore, the probability of an update during the funding period increases along with strong competition of other contemporary crowdfunding campaigns.     

The devil is in the details: The effect of nonverbal cues on crowdfunding success

Many reward-based crowdfunding platforms encourage entrepreneurs to introduce their projects and make a personal appeal with a video clip. In this study, we investigate the impact of such a pitch video on financing outcomes. Grounded in social perception literature, we propose that effective use of nonverbal cues in a pitch video increases funding success. We coded and analyzed videos of crowdfunding campaigns and found that an entrepreneur could improve the funding outcomes by gazing less, appearing early, and reducing speech hesitations in a pitch video. We also found that smiling has no impact on funding success.     

“The more options,the better?” Investigating the impact of the number of options on backers’ decisions in reward-based crowdfunding projects

The number of options in reward-based crowdfunding projects plays an important role in influencing backers’ decisions. However, prior studies provided two-pronged outcomes for the impact on the backers’ decision of supporting a project. They also neglected the impact on the backers’ decision on which option to select. Anchored on the theories of assortment decisions, we found that the number of options has an inverted U-shaped relationship with the backers’ decision on supporting a crowdfunding project. It also has a significant impact on the backers’ decision on selecting an option. Three studies were conducted, and they collectively provided a piece of solid evidence to our findings.     

An empirical investigation of signaling in reward-based crowdfunding

Start-ups often face the challenge of a shortage of capital, the so-called funding gap, which can be overcome by raising small amounts of money from a large number of individuals. As crowdfunding suffers from a continuous rise in failure rates, the aim of this article is to contribute to the research concerning success factors in reward-based crowdfunding campaigns by focusing on signaling theory. Based on data retrieved from the crowdfunding platform Kickstarter, our results indicate that social ties, investment preparation and presentation, the supply of multiple rewards as well as endeavors to communicate and interact with the crowd positively influence the probability of success of a reward-based crowdfunding campaign. In contrast, the funding goal, a campaign’s runtime and the estimated time of delivery for the rewards have a negative impact on the successful completion of a campaign.     

Behind the scenes: The role of writing guideline design in online charitable crowdfunding market

The online charitable crowdfunding platform has emerged as a powerful tool for raising funds from large crowds to support non-profit activities. Following a patronage model, fundraisers on the platform are forced to use compelling stories to capture the attention of individual donors. As such, conceptualizing a persuasive request narrative for projects posted on the platform becomes one of the most pressing issues. Project writing guidelines, as an important platform design, are widely adopted to help fundraisers. Unfortunately, their role in the market has not been well examined. To fill this research gap, we leverage a unique dataset from a leading donation-based crowdfunding platform in the United States and make full use of its policy change opportunity on writing guidelines to thoroughly investigate its impacts and the underlying mechanism on donors’ contributions. Our empirical results show that the more constraints the guidelines impose on writing, the more likely they are to weaken the persuasiveness of narratives. We specifically focus on three aspects of narrative complexity and find that writing guidelines have a negative impact on linguistic complexity, which in turn diminishes donors’ contribution behavior. Nevertheless, they have positive impacts on both content and structural complexity, with the difference being that increased content complexity weakens donors’ contributions, while higher structural complexity is more likely to attract donations. Moreover, we examine the heterogeneous effects of writing guidelines on fundraisers with varied involvements. These findings deepen our understanding of writing guidance design in online platforms and have implications for charitable crowdfunding platforms and fundraisers.     

The role of multidimensional social capital in crowdfunding: A comparative study in China and US

How does an entrepreneur's social network impact crowdfunding? Based on social capital theory, we developed a research model and conducted a comparative study using objective data collected from China and the U.S. We found that an entrepreneur's social network ties, obligations to fund other entrepreneurs, and the shared meaning of the crowdfunding project between the entrepreneur and the sponsors had significant effects on crowdfunding performance in both China and the U.S. The predictive power of the three dimensions of social capital was stronger in China than it was in the U.S. Obligation also had a greater impact in China.     

基于动静态表征的众筹协同预测方法

众筹是一个新兴的互联网金融平台,项目的发起者可以通过使用互联网,征求大量平台用户的资金来资助他们的项目.但是由于众筹平台所具有的独特规则,只有在特定时间内收集了足够的资金,项目的筹资才会成功进行交易.为了防止项目发起者和投资者在可能失败的项目上浪费时间和精力,动态追踪众筹项目的筹资过程以及估算其融资成功概率便极为重要.然而,现有的一些工作既没有针对动态预测跟踪机制的研究,也没有考虑平台上的项目发起者和投资者之间的动态行为交互.为了解决这些问题,基于长短期记忆网络设计了一种新颖的动静态协同预测模型.该模型着重分析了用户行为,包括评论的情绪倾向以及融资过程中的动态增量信息,从而将融资项目与投资人之间的交互行为进行深度挖掘分析.首先,针对平台上的静态特征和动态用户行为数据,通过不同的Embedding方法得到他们的深度表征.在此基础上,进一步设计了基于注意力机制的协同预测模型,以便了解项目融资的时序信息对最终结果的影响程度.最后,在真实的众筹数据集上进行的大量实验结果表明,所提出的动静态表征预测方法相比其他预测方法更为有效.     

基于区块链智能合约的代币系统

针对传统代币中存在的公信力不足、监管困难等问题,结合区块链和智能合约技术,设计了一种去中心化的区块链代币系统。以此区块链代币系统为基础,通过部署代币合约、众筹合约,构建了一个基于区块链的众筹系统,实现了基本的众筹功能。同时设计了资金管理合约,实现了众筹成功后对发起者的监督和资金的管理。最后通过以太坊平台进行系统测试,分析了该代币系统的功能性、安全性以及时间性能。结果表明,基于区块链的代币系统在实现代币基本功能的同时,能够有效提升代币的安全性和功能性。     

Money is not everything: A typology of crowdfunding project creators

While studies focus on how crowdfunding promotes the launch of innovative products or services through two-sided (creator-investor) platforms and digital tools, knowledge on the creator-side motivation is limited. To address this knowledge gap, our study identifies four types of crowdfunding project creators—social entrepreneur, fund seeker, indie producer, and daring dreamer—based on four motivations—achievement, monetary need, prosociality, and relationship building. We also examine how crowdfunding projects’ characteristics differ by the creator type and which characteristics are critical for enhancing projects’ performance. The study extends crowdfunding literature by deepening knowledge of creator-side motivation and contributes to crowdfunding practices by suggesting platform operators ways to attract and promote different types of project creators.     

An attractive proposition? Persuading retail consumers to prefer reward-based crowdfunding for owning upcoming technologies

Can ordinary consumers be persuaded to choose reward-based crowdfunding over retail purchase to own new technologies? To investigate, we developed a C2P (consumer-to-patron) Persuasion Model and tested it using mixed-factorial experimental design. Results showed positive influence of crowdfunding discounts on consumers’ likelihood to fund/refer which was negatively moderated by the expected waiting time to receive product. Affective cues helped with getting referrals but not donations. Technology attractiveness and price, along with consumers’ gender and risk-propensity had significant influences. Based on the findings, we recommend technopreneurs to consciously target ordinary consumers for funding, and e-commerce and crowdfunding platforms to form design synergies.     

基于区块链的众筹智能合约设计

众筹是当前热门的一种互联网融资模式，目前的众筹平台存在违规经营、公信力不足、监管不善等诸多问题。智能合约是一种由事件驱动的、具有状态的代码合约和算法合同，随着区块链技术的深入发展而受到广泛关注和研究。基于区块链的智能合约技术具有去中心化、自治化、可观察、可验证、可信息共享等特点，可以有效构建可编程金融，为解决众筹平台的问题提供了新的途径。在区块链和智能合约理论的基础上，搭建了众筹区块链（Crowdfunding Blockchain，CBC），并基于以太坊实验环境开发了众筹合约系统，将传统的众筹合约文本代码化，合约的存储与执行均在区块链上进行，这不仅保证了众筹项目的自治化和可靠性，而且提高了项目可信性和公信力。     

Not just an ego-trip: Exploring backers’ motivation for funding in incentive-based crowdfunding

Incentive-based forms of crowdfunding – such as reward-, equity- and lending-based crowdfunding – are becoming increasingly popular. However, research that studies backers’ motivations for funding in these environments is still in an embryonic state, revealing an inconsistent and narrow picture. The few existing studies are largely guided by the idea that backers are mainly egoistically motivated and do not have prosocial motives. We developed a research model that describes backers’ motivation and conducted an empirical study to examine this model. Results indicate that backers indeed have several self-interest motivations for funding: prospect of a reward; expectation of recognition from others; to lobby a certain project in the hopes of its fruition; and to develop their image. However, some backers are also prosocially motivated in that they develop feelings of liking for a certain venture and/or project team. Furthermore, we found evidence that herding has a significant moderating effect on backers’ reward motivation. Strategic IS researchers as well as crowdfunding practitioners can draw on our findings to systematically design, implement, and evaluate potential incentive systems that respond to reward-, recognition-, lobbying-, image- and liking-motives and thereby attract the crowd more effectively to invest in ventures presented on incentive-based crowdfunding systems.     

A social recommendation approach for reward-based crowdfunding campaigns

In recent years, a new kind of fundraising mode known as crowdfunding has gradually emerged. Because of the rapid spread of the internet, people can offer their creative ideas on a fundraising platform and attract mass backers to invest in their projects. Crowdfunding not only helps users to realize their dreams but also allows companies to carry out test marketing. Although crowdfunding brings huge opportunities, the success rate of fundraising plans remains low. In this study, we therefore propose a phase-based backer recommendation mechanism, which integrates information from crowdfunding and social networking platforms by analyzing the factors of social relationships, user preferences, and economic backgrounds, to help project creators to reach their fundraising goals at each stage. Our experimental results show that the proposed mechanism is effective in identifying appropriate backers with respect to the status of the project and significantly improves the success rates of crowdfunding. The proposed mechanism can provide greater business value and more opportunities to crowdfunding platforms and contribute to more successful fundraising plans.     

众筹融资创新与发展研究

众筹融资萌发于美国,在法律法规相对健全的欧美市场迅速发展。国内众筹融资起步较晚,但是发展速度很快。通过对众筹融资发展历程和发展现状的分析,总结出众筹融资的优劣势,并加以案例分析,对众筹未来发展趋势进行预测。     

Why funders invest in crowdfunding projects: Role of trust from the dual-process perspective

While previous studies have identified several factors that influence funders’ investment behavior in crowdfunding, few have explored the underlying mechanisms, particularly the potential boundary conditions in which the effect of funders’ trust varies. This paper examines two contextual variables: project type and funding level, which moderate the relationships between key antecedents and investment decisions. The research model based on the trust theory and dual-process perspective was developed and evaluated with a web-based experiment using actual crowdfunding projects chosen from a real crowdfunding site. Our findings provide new insight into the role of trust and its antecedents in different contexts.     

An investigation of enablers and inhibitors of crowdfunding adoption: Empirical evidence from startups in China

In recent years, crowdfunding has emerged as a new fundraising technique for startup ventures. Crowdfunding allows small businesses and startups to seek funding from a large number of private investors, the so‐called “crowdfunders.” Crowdfunding is beneficial for startup ventures by offering a variety of financial and nonfinancial benefits such as helping to solve funding difficulties, providing value‐added involvement, facilitating access to further funding, and providing publicity. In contrast, diffusion processes of new business innovations have become increasingly complicatedly and multifaceted in recent years. Potential users today are exposed to a wide range of influences that include word‐of‐mouth communications, network externalities, and social signals. Despite the advantages associated with crowdfunding, the crowdfunding industry faces slow rates of diffusion in the Chinese market because crowdfunding ventures often fail to translate into adoption behavior. This study investigates the enablers and inhibitors of crowdfunding adoption intention from the perspective of startups by employing the two‐factor theory, status quo bias theory, and innovation diffusion theory. These theories allow crowdfunding researchers and platform managers to test the relative influence of both reasons for (enablers) and reasons against (inhibitors) crowdfunding adoption in a single framework. In conclusion, considering the phenomenon of startups in China, the results of this study will fill the paucity of empirical research in the innovation resistance area, shedding light on the motivation of entrepreneurs to avoid crowdfunding as a financing course as well as providing crowdfunding managers and policymakers with strategic recommendations.     

一种即开型电子彩票发行方案

本文设计了一种即开型电子彩票方案,中奖号码以及奖金由彩票发行机构在发行该彩票前提前设置,是一种快捷,灵活的彩票发行方案。该方案基于求解离散对数问题的困难性来设置中奖号码与彩票内容,应用签密体制实现了彩票的指定销售,引入Hash函数公开验证中奖信息,与传统电子彩票相比,使得彩票购买者等待中奖结果与兑奖的时间大幅度缩短。在安全方面,该方案具有指定性、保密性、不可伪造性、可公开验证性等特点。